The Energy Regulatory Commission has partially lifted the enforced suspension on cost settlements at the reserve market, hence, allowing the generation companies (GenCos) to recoup P1.723 billion worth of deferred cost recoveries which accrued when they supplied the ancillary services requirements of the power system operator.

According to the regulatory body, the total recovery amount temporarily hobbled by the suspension mandate hovered at P5.744 billion, but only 30% of that can be passed on following this latest ERC order.

When the pass-on will be implemented by the private distribution utilities (DUs) and electric cooperatives, that will redound as added cost to be reflected in the electric bills of consumers.

The suspension of settlements at the reserve market was issued on March 25 this year, and that perturbed power generators on stifled cost recoveries, while they are still mandated to seamlessly provide such service to the system operator.

“The Commission resolved to allow settlement of 30% of the amounts for payment for trading transactions made in the reserve market for the March 2024 billing month,” the regulatory agency stressed.

The reserve market serves as another layer of trading in the Wholesale Electricity Spot Market (WESM) and it primarily caters to supplying the ancillary services needs of the National Grid Corporation of the Philippines, or that warranted power supply for the reliable operation of the power grids.

The ERC qualified that “based on simulation, the estimated total amount to be partially paid to generators in the reserve market will be at P1,723,163,667.02,” but that will be subject to adjustment upon NGCP’s submission of the list of non-compliant generators.

ERC Chairperson Monalisa C. Dimalanta similarly emphasized that the Commission is still “evaluating the submissions of IEMOP (Independent Electricity Market Operator of the Philippines) for our review of the PDM (price determination methodology).”

The PDM refers to the mechanism for determining the prices and settlements in the WESM as prescribed in the Market Manual.

On the partial lifting, the ERC defended that its decision “was made in an effort to ensure continuous operations of power generators providing reserves in the system following the suspension order.”

The Commission said it opted “to strike a balance in performing its mandate to ensure the reliability and security of the power system through the continuous operations of the generators and protecting the consuming public.”

For the April billing month, Dimalanta conveyed that cost recoveries did not pile up anymore, because the power generators without ancillary services procurement agreements (ASPAs) no longer offered their capacities in the spot market.

“Those with ASPAs are not really affected because they are paid under their ASPA, similar to energy market power supply agreements (PSAs),” she expounded.